FIRS to pursue directors and management staff for outstanding corporate tax liabilities

Federal Inland Revenue Service (FIRS) on Monday, 19 August 2019, issued a public notice mandating companies with lien on their accounts to regularise their tax status and pay the tax due within 30 days of the public notice. In the event of non-compliance within the stated timeline, FIRS has stated its intention to recover the tax liabilities from directors, managers, secretaries and other management staff of such companies.

This final warning appears to be linked to FIRS’ decision to publish a list of over 19,000 corporate tax defaulters with the name of their bankers. With these publications, it appears that FIRS is poised to go all out in order to fully recover “outstanding tax liabilities”.

It would be recalled that in March 2019, FIRS issued a warning to taxpayers on the impending lien to be imposed on their bank accounts for non-compliance with provisions of the enabling tax legislation on value added tax and withholding tax. The March 2019 warning emanated from an earlier FIRS notice mandating banks to place a lien on defaulting taxpayers’ accounts for a period of 30 days. Please click here to access our earlier tax alert in this regard.

Though FIRS is empowered, under Section 31 of the FIRS (Establishment) Act (FIRSEA) and Section 49 of the Companies Income Tax Act (CITA), to appoint any person to be the agent of a taxable person for the purpose of recovering tax debts from such taxable person, such powers become exercisable when there is a confirmation of the alleged tax liabilities. Comments and reactions from various concerned taxpayers would suggest that the matter of outstanding tax liabilities are, at best, mere allegation in some instances. Please click here to access our detailed analysis on this subject.

The above notwithstanding, we advise that taxpayers should continue to review their tax records and ensure compliance with the law to avoid disruption to their businesses. Additionally, the companies affected by this notice should liaise with the relevant consultants and FIRS on how to resolve all the issues going forward.

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